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The 33-year-old MacDonnell House in Mid-Levels got some unusual footprints last Saturday, the first day for public viewing of the former government quarters that will be auctioned off later this month.

This is the first time the Government Property Agency has offered a Mid-Levels luxury apartment for auction, cashing in on the demand in both the secondary and luxury markets on Hong Kong Island, where supply has been insufficient for a long time.

The flat, which was just emptied four months ago, has a gross floor area of 2,519 square feet, including four bedrooms, two bathrooms and a parking space. The government set the opening bid at HK$41 million.

Evans Lee, an employee of a trading company who viewed the flat, said the basic bidding price was reasonable but it would probably climb to HK$75 million eventually. He lives on the Peak, another hot spot for luxury housing, but he wants to move down the hill.

"I am getting old and I don't want to live up there [on the Peak] all the time because it's too humid. The Mid-Levels area is convenient for its closeness to Central, and I don't need to drive," he said. "But [the flat] is on the second floor, [which is] too low for me, and there is a gas station nearby, [which is] a bit noisy."

It is the second time this year the government has provided surplus civil servant quarter homes for bidding. In February, 10 former government quarters were sold for about HK$320 million in total through a public auction. Last year, the sale of 23 government properties through public auction and tender generated revenue of HK$400 million, according to public records.

"The government wants to sell [the flats] amid good market sentiment," said Alvin Lam Tsz-pun, a director of Midland Surveyors, which will arrange the auction on August 25. "[The flats are] in luxury locations, and supply in the secondary market is rare. So these properties can draw market attention."

The flat at MacDonnell House is among 10 properties to be sold in the auction, with the opening bids ranging from HK$26 million to HK$41 million. It is valued the highest in Midland's records, while the cheapest property is a 1,947 sqft flat at Pokfulam Mansion close to the University of Hong Kong. Other properties on offer include Baguio Villa, Pokfulam Mansion, Cape Mansions in Pok Fu Lam and Elm Tree Towers in Tai Hang.

Research from consultancy Savills showed prices of luxury apartments rose 6.2 per cent in the second quarter from the previous three months, with those on the Mid-Levels and in Pok Fu Lam gaining 4.1 per cent and 7.3 per cent respectively.

Lam said most of the bidders would be end-users, based on previous selling records, and the final bid for the majority of the auctioned properties would likely be 13 to 30 per cent higher than the opening bid.

If the bidding price of a property was below the minimum price set by the government, it would be withdrawn from the auction, he added.